Briefing
This paper introduces a formal theory of Maximal Extractable Value (MEV), addressing the critical absence of rigorous theoretical foundations for these pervasive economic attacks on public blockchains. It proposes a general, abstract model of blockchains and smart contracts, which serves as a foundational basis for constructing provable security guarantees against MEV. This breakthrough implies a future where blockchain architectures can be designed with inherent, verifiable resistance to value extraction, thereby enhancing network integrity and user fairness across decentralized applications.
Context
Before this research, Maximal Extractable Value (MEV) was largely understood through empirical observations of economic attacks, where adversaries reorder, drop, or insert transactions to extract value from smart contracts. This prevailing limitation meant that despite the significant real-world impact and billions of dollars lost to MEV, a comprehensive, formal theoretical framework to systematically analyze and mitigate these attacks was insufficiently established. The lack of such a foundational model hindered the development of provably secure and resilient blockchain protocols.
Analysis
The core mechanism proposed is a formal theory of MEV, built upon a general, abstract model of blockchains and smart contracts. This model fundamentally differs from previous approaches by moving beyond empirical descriptions to provide a precise, mathematical framework. It defines the conditions under which value extraction can occur, detailing the interplay between transaction ordering, smart contract state, and adversarial capabilities. This formalization allows for the derivation of security proofs, enabling a rigorous analysis of MEV vulnerabilities and the design of countermeasures that are mathematically verifiable.
Parameters
Outlook
This formal theory of MEV opens new avenues for protocol design and academic research. In the next 3-5 years, it could unlock the development of blockchain architectures with provable MEV resistance, leading to more equitable transaction ordering mechanisms and fairer decentralized finance (DeFi) applications. Future research will likely focus on extending this abstract model to specific blockchain environments and integrating MEV-aware design principles into new consensus algorithms and smart contract languages, fostering a more secure and predictable on-chain ecosystem.
Signal Acquired from ∞ arxiv.org
